Creating your Products

The Sales ‣ Products menu gives you access to the definition of products. In OpenERP, product is used to define a raw material, a stockable product, a consumable or a service.

Tip

Consumables

In OpenERP, a consumable is a physical product which is treated like a stockable product, with the exception that stock management is not taken into account by the system. You could buy it, deliver it or produce it, but OpenERP will always assume that there is enough of it in stock. Examples: nails, labels.

Open a product form to see its specific information.

Price lists (Sales ‣ Configuration ‣ Pricelists) determine the purchase and selling prices and adjustments derived from the use of different currencies. The Default Purchase Pricelist uses the product’s Cost Price field for the Purchase price to be calculated. The Public Pricelist uses the product’s Sale Price field to calculate the Sales price in quotations.

Price lists are extremely flexible and enable you to put a complete price management policy in place. They are composed of simple rules that enable you to build up a rule set for most complex situations: multiple discounts, selling prices based on purchase prices, price reductions, promotions on product ranges and so on.

To start, define the following product:

Product Definition
Field Value
Name Central Heating Type 1
Reference CCT1
Product Type Stockable Product
Supply Method Buy

From the menu Sales ‣ Product ‣ Products, click New to define a new product.

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Defining a New Product

Three fields are important when you are configuring a new product:

  • Product Type,
  • Procurement Method,
  • Supply Method.

Using the Correct Product Types

The product type indicates whether the product is handled in stock management and if OpenERP manages its procurement. The three distinct product types are:

  • Stockable Product: this product is used in stock management and its replenishment is more or less automated as defined by the rules established in the system. For these products, we have to know how many pieces we have in stock. Examples: a bicycle, a computer or a central heating system.
  • Consumable: This product is handled in stock management, you can receive it, deliver it and produce it. However, its stock level is not managed by the system. OpenERP assumes that you have got sufficient levels in stock at all times, so it does not restock it automatically. Example: nails, labels.
  • Service: It does not appear in the various stock operations. Example: a consulting service.

Procurement Methods – Make to Stock and Make to Order

The procurement method determines how the product will be replenished:

  • Make to Stock: your customers are supplied from available stock. If the quantities in stock are too low to fulfil the order, a Purchase Order (according the minimum stock rules) will be generated in order to get the products required. Example: a classic distributor.
  • Make to Order: when a customer order is confirmed, you procure or manufacture the products for this order. A customer order ‘Make to Order’ will not modify stock in the medium term because you restock with the exact amount that was ordered. Example: computers from a large supplier assembled on demand.

You find a mix of these two modes used for the different final and intermediate products in most industries. The procurement method shown on the product form is a default value for the order, enabling the salesperson to choose the best mode for fulfilling a particular order by varying the sales order parameters as needed.

The figures Change in Stock for a Make to Stock Product and Change in Stock for a Make to Order Product show the change of stock levels for one product managed as Make to Order and another managed as Make to Stock. The two figures are taken from OpenERP’s Stock Level Forecast report, available from the product form.

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Change in Stock for a Make to Stock Product

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Change in Stock for a Make to Order Product

Note

Logistical Methods

The Make to Stock logistical approach is usually used for high volumes and when the demand is seasonal or otherwise easy to forecast. The Make to Order approach is used for products that are measured, or very expensive to stock or have a short restocking time.

Choosing Supply Methods

OpenERP supports two supply methods:

  • Produce: when the product is manufactured or the service is supplied from internal resources.
  • Buy: when the product is bought from a supplier.

These are just the default settings used by the system during automated replenishment. The same product can be either manufactured internally or bought from a supplier.

These three fields (Supply Method, Procurement Method, Product Type) determine the system’s behaviour when a product is required. The system will generate different documents depending on the configuration of these three fields.

Figure Workflow for Automatic Procurement, depending on the Product Configuration illustrates different cases for automatic procurement.

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Workflow for Automatic Procurement, depending on the Product Configuration

Understanding Units of Measure

OpenERP supports several units of measure. Quantities of the same product can be expressed in several units of measure at once. For example, you can buy grain by the tonne and resell it by kg. You just have to make sure that all the units of measure used for a product are in the same units of measure category.

Note

Categories of Units of Measure

All units of measure in the same category are convertible from one unit to another.

The table below shows some examples of units of measure and their category. The factor is used to convert from one unit of measure to another as long as they are in the same category.

Example Units of Measure
UoM Category Ratio UoM Type
Kg Weight 1 Reference
Gram Weight 1000 Smaller
Tonne Weight 1000 Bigger
Hour Working time 8 Smaller
Day Working time 1 Reference
Half-day Working time 4 Smaller
Item Unit 1  
100 Items Unit 0.01  

Depending on the table above, you have 1Kg = 1000g = 0.001 Tonnes. A product in the Weight category could be expressed in Kg, Tonnes or Grammes. You cannot express it in hours or pieces, for example.

Use the menu Sales ‣ Configuration ‣ Products ‣ Units of Measure ‣ Units of Measure to define a new unit of measure.

In the definition of a Unit of Measure, you have a Rounding precision factor which shows how amounts are rounded after the conversion. A value of 1 gives rounding to the level of one unit. 0.01 gives rounding to one hundredth.

Note

Secondary Units

OpenERP supports double units of measure. Notice however that the default unit of measure and the purchase unit of measure have to be in the same category. Only the sales unit of measure may be in a different category.

This is very useful in the agro-food industry, for example: you sell ham by the piece but invoice by the Kg. A weighing operation is needed before invoicing the customer.

To activate the management options for double units of measure, assign the group Useability / Product UoS View to your user.

In this case, the same product can be expressed in two units of measure belonging to different categories for sales and stock/purchase. You can then distinguish between the unit of stock management (the piece) and the unit of invoicing or sales (kg).

In the product form you can then set one unit of measure for sales and stock management, and one unit of measure for purchases.

For each operation on a product, you can use another unit of measure, as long as it can be found in the same category as the two units already defined. If you use another unit of measure, OpenERP automatically handles the conversion of prices and quantities.

So if you have 430 Kg of carrots at 5.30 EUR/Kg, OpenERP will automatically make the conversion if you want to sell in tonnes – 0.43 tonnes at 5300 EUR / tonne. If you had set a rounding factor of 0.1 for the tonne unit of measure, OpenERP will tell you that you have only 0.4 tonnes available.

The Sales ‣ Products menu allows you to create new products and update existing products.

Categorizing your Products

Unlike partner categories (as explained in chapter Categorizing your Partners) and their assigned partners, product categories do have an effect on the products assigned to them - and a product may only belong to one category. Product categories are linked to accounting and they determine the default income / expense account when invoicing. For a CRM point of view, categories will be very useful to group your sales information in a different way.

Suppose you would like to have product categories that correspond to your product lines (or your lines of business). With such a category tree structure, you can easily track your opportunities and forecast per product line. Go to the Reporting menu, and open the Sales Analysis screen to group your quotations and sales orders by category of products.

You can define new product categories from the Sales ‣ Sales ‣ Configuration ‣ Product ‣ Products Categories, and also directly from the Product form.

From the Sales ‣ Product ‣ Products by Category menu, you get an overview of all product categories according to their tree structure. To see the products linked to a particular category, simply unfold and/or click the product concerned. All products from that category will be displayed.

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